“Bitcoin” has been the talk of the town and there is a lot of doubts and queries everyone have on Bitcoin Investment. Am I too late? Is it just a Gamble? Should I invest in Bitcoin? Or should I invest in Ethereum or LiteCoin? And what about FREE Bitcoins? Is that a scam? Should I try Bitcoin mining? And what are trustworthy platforms for Bitcoin trading in India? Is Bitconnect a Ponzi Scheme?
Spend some time with this exhaustive Guide on Bitcoin Investment and you will have all your questions answered.
Before trying to understand Bitcoin, Lets for 2 minutes understand a little bit more about “money”. What is Money? Its simply a representation of worth or value that you are holding using an Instrument provided by a central authority like RBI. Government prints that Instruments as “Notes” or “Coins” and the circulation of the same happens in the market. You ask for “Money” based on Notional value which you have in mind. Lets say you ask someone for Rs. 1000 for a job you do. You know somewhere in your brain that Rs. 1000 can fetch you x,y,z items. You accept that piece of papper money since you “trust” the government.
Obviously, if you think more about it, Printing Money or circulating coins or currency does not come for FREE. There are a lot of resources or taxpayer money (Paradox — Taxpayer money to generate more money) which goes behind running the entire “Currency of the country”. And then comes the Fees from the banks to do international transfer or to get a cheque book.. Nothing is FREE and even if the bank claims its a Zero Fee account, you might be paying fees by getting a lower interest rate or something.
So what are some dis-advantages of Current form of Currency?
- Centralized (Government has complete control)
- Not Scarce (Government and countries can decide how much to print which brings down purchasing power of individual)
- No Global Currency (Even if you have a 5$ note in your pocket, your sabjiwala may still not accept it and you need to exchange it to Rupees and pay exhange rate fees)
- Expensive (Fees you would pay to Government for printing, re-printing, circulation. Fees you pay to banks or Wallets like PayTM to manage your account, transfer from one account to other etc.)
Without using any technical terms, Lets understand Blockchain technology in very simple Words! Lets think about BlockChain as a Shared Record book or a Ledger. Every time you do a transaction with someone else, Lets add a new line to shared Record book.
Now the big question which may come to your mind is Where is the “Shared Record Book” stored and who maintains it? That’s where the BlockChain technology kicks in.. As you would imagine, Shared Record book is stored on thousands and thousands of computers across the world. Every time a transaction happens, it gets copied to multiple computers and then it gets authorized by the same computers. The beauty here is there is no Bank, No government, no company that you need to trust as there is no middle-men. It’s owned by everyone who has copy of Shared Record book. And the Shared record book is immutable or irreversible… Meaning you cannot go back and change any older entry ever. Every transaction gets written down digitally and there is no way to destroy that.
Bitcoin is obviously based on Blockchain technology. Is it a Bubble or worth that much? To answer this question, you need to ask yourself — Do you see the current form of currency (Notes and coin printed by Government and countries for their own benefits) as future currency? If not 20 years down the line, do you see people using paper currency 50 years down the line? Or do you see a decentralized transparent peer to peer network based technology which can power the future currency? Bitcoin is just one form of currency based on Blockchain… There are hundreds others which have come up and may have more advantages over bitcoin (like lesser costs, lesser power required etc)… But the basic premise of Blockchain Technology still holds true for all of them.
A common question asked by Many… When your employer says he paid you Rs. 20,000 or Rs. 50,000 in Salary and does some digital transfer… Do you actually see the cash? It still works as you trust the mechanism (Government, Banks and ATM)
Still not convinced? When Gold or Silver actually got replaced by “Paper Currency”, it was just a piece of paper instead of something physical or real. However, it worked as it was more convenient, more practical form. Similarly Bitcoin or some other Cryptocurrency / Digital Currency can still replace or will replace current currency as its going to be more and more convenient or practical as it has advantages like Decentralized, Global, Transparent, Convenient and Limited.
My hope is that you are now somewhat convinced behind BlockChain Technology (its merits and power behind it and how it can tranform the entire banking/payments industry) and how it can or will power the future Global Currency.
Currently, the speculation is that BitCoin will be that Global “future” currency or atleast a Gold-equivalent of “future”, though no one really knows if that will be true or not. Nevertheless, it would be foolhardy to assume that it will take years and years to replace current form of currency as Technology can move very fast and widespread adoption of any crypto-currency can take us all by a surprise.
Even though things may look a bit cryptic as its all digital and surrounded by Jargons… Let’s first start from Major platforms in India which allows one to hold, buy or sell bitcoins securely without much technical understanding.
I have given detailed example below for Zebpay. Its as easy as doing transaction on eCommerce website. You can use anyone below as its matter of personal preference. Think about them as equivalent to Banks… Just like banks, these platforms are either funded or backed by Trusted individuals and is simplest way to buy or sell Bitcoins. Obviously you need to place some trust that they “may” not run away just as all of us probably trust PayTM, Freecharge, Flipkart’s Phonepe etc or even Private Banks for that matter.
Zebpay has been in Cryptocurrency space since 2011 and have also been backed by a Series-A round of 1mn $ funding. So it can be considered as a Good trusted platform to start with…
They currently provide an Android and iOS App to get started. Once you Download and Install the app, Simply follow the steps below:
1) Once you install and open, It will explain you more about the app. Click “Got it” once you have understood the basics.
2) Enter your mobile number. Click Accept and Continue.
3) Enter the One time Verification code received on your mobile phone. Click Verify.
4) Next, it will ask you to Setup a 4-Digit PIN. Make sure this PIN is not shared with anyone including Zebpay. This is more like your password to keep your bitcoins safe.
5) OPTIONAL — It may ask you for Fingerprint. Its completely upto you, though I would just prefer the PIN method.
Great! Your account is created and now you would be able to See your Bitcoin balance and the equivalent Rupee balance (See below)
6) Perfect! Next you need to tap on “Verification” to ensure that your account is completely KYC Verified. You need to provide your Email, PAN Card, Bank Account and Aadhar. The steps are extremely simple and once you upload everything, you can sit back and relax. Its best time to look at “Buy” and “Sell” rate to understand how the currency fluctuates etc.
8) Once the account is verified, One can transfer amount from Bank Account which will be then visible in your Main balance section. Use “Buy” button to do your first transactions and you will see your currency magically converted into Bitcoins. Congratulations! You now hold Bitcoins with you.
9) I would not go into trading aspects in depth as the whole purpose is to hold certain amount in BitCoins so that way you are safe and covered if Bitcoin becomes the future currency. However, if you have the risk apetite, you can buy and sell as many times as you want to get gains from the fluctuations.
UnoCoin is extremely similar to Zebpay and one advantage it has is that it also allows one to Buy or sell Bitcoins via Website and is not limited to app.
Download Unocoin App & Get Rs.234 Wallet Balance & Use Coupon FEVER250 at the time of signup to get Rs 324 else use someone's referral to get bonus.
If you are looking at actively trading Bitcoins, Zebpay and Unocoin may not be the best platforms. In such cases, its recommended to use a platform like Koinex as Buy — sell Spread is much less compared to Zebpay.
Personally, I prefer to use Koinex for my personal account.
1) Koinex by default shows you Ethereum data. Click on Drop down to select “Bitcoin”.
2) Signup is simple. Simply enter the details and complete OTP Verification etc.
3) Once Mobile verified, Submit your KYC Details.
Another Big advantage with Koinex is that you can also buy Altcoins. (Altcoins refer to coins other than bitcoins which are based on same Blockchain Technology). Read about Diversification below.
However, other exchanges such as
Coinsecure is also a good exchange ( with the lowest spread ).
Coinome also seems good as it offers instant verification with aadhar ( backed by billdesk ).
bitbns.com also seems good that is started buyHatke Company
While Zebpay also allows you to convert Bitcoin to Bitcoin Cash (Kindly note Bitcoin Cash is another variant of Cryptocurrency), I would strongly recommend to stay away from the same and also avoid Bitcoin Gold for the moment. There are various Reddit Threads which suggest that BCH fork had many hidden motives of certain individual behind it and hence am avoiding dealing with BCH currently.
Suppose you are planning to invest Rs. 1 Lakh in Crypto-currency. In that particular case, I feel, it might be a good idea to diversify your Holdings into Bitcoin, LiteCoin, Dash, Ethereum, Ripple etc. My personal portfolio split is 70% Bitcoin, 10% Ethereum, 10% LiteCoin, 10% Ripple and 0% Dash. Buying some ICO might also be a good idea. Will explain more about
ICO in another article soon.
In my opinion, there is a merit in starting small with cryptocurrency and one can start converting atleast 2% of their annual Salary into Bitcoin or other forms of Crypto-currency. Atleast that’s the ratio I am following. Do share how much are you investing in Bitcoins in comments below.
RBI has issued series of warnings against trading in Bitcoins. Hence, there is no clear picture available as RBI currently does not recommend investments in Bitcoins in the first place. However, with more and more people getting into Bitcoins, RBI will have to form regulations around Bitcoin investment to not loose out on tax revenues afterall
Expect to pay anywhere between 20% to 35% tax in Bitcoin earnings. One can also use bitcoin for online purchase. It wont be surprising to see more and more eCommerce companies accepting Bitcoins including ability to soon Buy GC.
In very simple terms, its getting rewards for solving very difficult computational puzzle. You can view this nice video to understand more:
WHAT IS BITCOIN MINING?
Mining is a process in which a user is rewarded for his hardware’s work put in to help write on blockchain. When bitcoin came about being the creator Satoshi Nakamoto envisioned a fair distribution method to give btc as rewards who help secure the network. Since then mining has been running and is a race to mine bitcoins and altcoins such as bitcoin, ethereum, steem, library coins and many others that support CPU, GPU and ASIC mining. Bitcoin mining started in 2009 when the first block was mined by Satoshi himself. It is believed that the first 10 blocks were mined by him to test the network later on people like Steve Finney and Gavin Anderson jumped in to support the network. In the early days btc was only mined with cpu, later on software’s such as cgminer and sgminer allowed you to mine with gpu allowed you to mine much faster. This was followed by ASIC mining (application specific integrated-circuit), which are specially designed hardware to mine a certain algorithim came into being. This cause the bitcoin network to have the best hashing power and the strongest network in the world. However this also caused the difficulty to rise exponentially.
SETUP OF MINER RIGS SHOWN
How To Mine Bitcoins In India – A Simple Step-By-Step Guide
Some Tips :-
- BTC is always good if you hold them for long time
- Some are worried that how they will show income ? if you buy and sell on Indian exchanges you dont need to worry , try not to send and receive BTC from international market
- Expected price of BTC in first quarter of 2018 – $ 19K-22K (Could be more or even less:-P )
- No one can predict bitcoin price exactly , but if market expands to 1 trillion dollar, price could reach to $25K
- If you are new to Bitcoin /crypto currencies dont invest directly monitor rates on coin market cap for atleast 10-15 days and then you are good to go.
- Recommended Indian exchanges – Zebpay, Koinex
- Also remember never sell in panic (dump) and never buy in craze (pump) .
- never invest all your money into 1 investment (But you can in case of bitcoin as it is safest among all).
- take part in ICOs after getting full knowledge about it .
- always keep your currency in main wallet rather than exchange wallet ..
- dont forget to take benefit of BTC forks – free coins
- Enable 2FA security for all exchanges .. and save backup key at safe place in case of mobile lost you will need it .
My personal recommendation is Bitcoin mining will only get more and more expensive and since around 16mn Bitcoins are already available out of 21 mn Bitcoin. Mining is not a lucrative business unless you have the hardware and software power to run Mining.
Current referral scheme/ signup bonus for various exchanges -
Unocoin – get Rs 250-200 while signup
Zebpay- get Rs 100 after first transaction
Koinex- get Rs 100 after first transcaton
Even though it may seem that it might be too late. If Bitcoin is actually going to become the “Future” Currency, then its not late as all and it may continue to rise in 2018. So its not a bad idea to still invest a small amount of your Wealth in BitCoins or any other form of CryptoCurrency. Just like stock markets, There will be buying opportunities and you have to trust your “gut” or “intuition” and buy during the dips… You should not buy just because some Delhi kid converted his 6.3 Lakh to 90 Lakh
If you find this helpful, Also do share on what topics you would like to hear more on and I promise, I will continue to share my journey with Crypto currencies.
Disclaimer – The thoughts expressed in this article is simply my belief/recommendations. I wont be responsible if Bitcoin markets go down completely and/or for any profits or loss incurred. So kindly do your own due diligence. I neither claim myself to be any expert etc… I am just sharing my thoughts and understanding for benefits of Dimers.